Transcription

Global Supply Chain Control eerer nncenccece NuNuummberAchieving end-to-end Supply Chain Visibility

GLOBALOB LCONTROLTOWERPrepared and edited by:Gaurav BhosleCapgemini Consulting IndiaPrashant KumarCapgemini Consulting IndiaBelinda Griffin-CryanCapgemini Consulting USARob van DoesburgCapgemini Consulting NetherlandMarieAnne SparksCapgemini Consulting FranceAdrian PatonCapgemini Consulting UK

LC o nte nts45812IntroductionCurrent state and challenges in Supply Chain VisibilityUnderstanding Control TowersSetting up a Control Tower

IntroductionToday’s competitive businesslandscape and ever evolvingcustomer demands are re-shapingtraditional supply chains. First andforemost, Globalization is increasingsupply chain complexity, asphysical supply chains extend theirgeographic scope in order toleverage low cost sourcing optionsand gain access to emergingmarkets. The movement ofmanufacturing facilities near to thekey markets is also increasingsupply chain complexity. And,outsourcing is taking the supplychain outside the four walls of anorganization meaning collaborationwith partners becomes imperativefor supply chain effectiveness.In addition to the complexitiesbrought by globalization there iscontinuing pressure in mostorganizations to increase revenuesand profit margins. These criticalbusiness challenges are driving theneed to focus on creating strongend-to-end Supply Chain Visibilitycapabilities.Supply Chain Visibility is the keyenabler for managing a businessboth within the organizationalboundaries as well as across theboundaries. This visibility providesspeed, reliability and flexibility inorder to gain a competitiveadvantage in the form of wellcontrolled and managed supplychain functions. In response to theneed for Supply Chain Visibility,the leading Supply Chain Visibilityprinciples are increasingly beingembodied in Supply Chain ControlTowers. A supply chain controltower is a central hub with therequired technology, organizationand processes to capture and usesupply chain data to provideenhanced visibility for short andlong term decision making that isaligned with strategic objectives.

Current state andchallenges in SupplyChain VisibilitySupply Chain VisibilitySupply Chain Visibility is all abouthow organizations capture andinterconnect data to extract criticalsupply chain execution information.It provides a single view fortracking information, material and/or cost by monitoring keydimensions in a global supplychain, such as inventory positionsor shipment in-transit status andreal-time order movements in orderto make informed and fact baseddecisions.Delivering Supply Chain Visibilitymeans measuring and controlling theeffectiveness of the overall supplychain in four key areas (Figure 1Source: supply-chain-visibility.com):1 - agility, defined as the capacityto change supply chain processes,goals, partners, facilities, and othertangible aspects with minimal delay orunwanted impact.2 - resilience, which is defined asthe capacity to withstand unknownand uncontrollable events withTotal Supply Chain tyResponsivenessThe Black Box ofVisibility ProcessesFigure1: Supply Chain Effectiveness

minimal impact, to operationswhether in terms of magnitude orduration.3 – reliability, which measuresthe capacity to meet commitmentson quality, timeliness, cost,availability, service level, etc. whichis a basic requirement of supplychain effectiveness.4 – responsiveness, defined asthe capacity to capture informationand adapt to changes in theenvironment including changes indemand, capacity, regulations, thecompetitive environment, or anyother aspect which has the potentialto impact business value.Phases in Supply ChainVisibility TransformationMany organizations have alreadyimplemented or are in the processof implementing Supply ChainVisibility solutions. However, thesesolutions reflect different levels ofmaturity. The maturity level of aparticular visibility solution isdefined by the associated tools,processes and skills of the peopleinvolved and generally will fall intoone of three phases. As might beexpected, each phase reflects ahigher level of maturity than theprevious one.Phase One - At the mostrudimentary level, the focus is onachieving operational level visibilityon supply chain data such asshipment and inventory status. Thescope of the solution is usuallylimited to one or two processes,such as either outbound or inboundlogistics depending on the strategicimportance of one or the other. Thetools focus on collecting data. Thecapabilities of staff are very muchon operational level.Phase Two - The second phasefocuses on following the status ofshipments across multiple supplychain nodes and tracing theproblems occurring in between. Thescope includes all the processesrelated to inbound and outboundlogistics. The tools provide alertsfor exceptions and events. Theseapplications are incorporated withsome basic reporting and analyticscapabilities and a knowledge bankfor decision support. Theorganization and supporting staffhas capabilities to pro-actively actupon (potential) issues in thesupply chain.Phase Three- The third(advanced) phase, known aspredictive visibility, focuses on selflearning algorithms to predict thepotential problems and generatealarms for upcoming events. Thesesolutions are gaining popularity byproviding proactive monitoring ofsupply chain functions and helpingwith decision support systems. Thistype of visibility is useful in theshort term, assuming the operationsprovide the real time information.Such visibility also enablesimproved planning capabilities andallows shippers to make bettertactical or strategic decisions onoptimization of the supply chain.

Leading Practices in SupplyChain VisibilitySuccessful Supply Chain Visibilitysolutions are deployed around fiveleading practices which enable anorganization to achieve an end-toend view of inbound and outboundoperations:1. Create an ‘Information Hub’ –integrate and aggregate keyinformation from inside andoutside the enterprise such as keyorder, shipment, and inventoryinformation from all internal ERP,TMS, WMS and other inventoryplanning systems2. Track landed costs along thechain – reduce total landed costsby tracking product, freight andinsurance costs as well asintegrating trade complianceinformation such as duties, tax,VAT and other governmentalcharges3. Manage trading partners withscorecards – use a repository ofsupply chain data and developscorecards to manage suppliercompliance, or transportationbooking performance etc. tocontinuously improve globaloperations4. Achieve organizational buy-in– gain the CFO and financeorganization’s support byextending the visibility solution toinclude financial settlement andfinancing triggers5. Devise a risk managementframework – configure visibilitytools and solutions for SarbanesOxley (SOX) risk mitigation anddisaster recovery in order torecover effectively from riskrelated eventsThese leading Supply Chain Visibilitypractices are the key in gaining anefficient end-to-end supply chainview. These can most effectively beachieved with an integrated ControlTower solution that includes havingthe right people chosen and trained toact upon the data provided. A largenumber of leading organizations haveadopted this approach and have beenable to successfully reap the benefits,giving them more control over theirmarket reach.

UnderstandingControl TowersControl Towers are cross-divisionalorganizations with system integrated“information hubs” that provideSupply Chain Visibility. These hubsare used for gathering and distributinginformation, and allow people trainedto use these visibility capabilities todetect and act on risks oropportunities more quickly. ControlTowers are typically set-up tomonitor, measure and managetransport and inventory movementsacross the supply chain.As shown in figure 2, Control towerscombine organizations (people),systems and processes in order tosDenig Strategic – provides control overthe design of the overall supply chainnetwork Tactical – enables proactiveplanning of procurement, operationsand distribution according to marketdemand Operational – encompassesvarious real time functionalityincluding transportation management,inventory tracking and exceptionmanagementPeopleProvides expertise for planning,execution and optimization ofproduct movementsanprovide supply chain partners with ahigh level of product visibility alongthe entire supply chain. This enablesthree levels of management control:drunProcessHarmonized processes for managingcontrol tower functionsFigure 2: Three Pillars of Control rated and drivenby technologyInformation repository with data analyticsand decision support functionalities

Getting the technology aspect right isfundamental to the overall success ofthe control tower concept. As shownin figure 3, while setting up a ControlTower, different systems areintegrated with each other with thehelp of common middleware softwareand all information is gathered at acentralized location. This informationis then used for auditing, monitoringand taking effective decisions.Every product ordered from asupplier; every shipment shipped to acustomer; every document created;every cost accrued; and every eventgenerated in the flow of product fromorder to final delivery is captured,organized and stored in the tower.In-transit inventory at the part/SKUlevel can also be captured by theControl Tower.This way a rich store of valuablesupply chain information is created,enabling end-to-end control of acustomer driven supply chain.Figure 4 shows some of the additionalfunctionality that Control Towersprovide. Control Towers provideunprecedented supply chain flexibilityfor dynamic planning and routing.Control Towers allow the generationof reports that shows the total landedOrganizationfor monitoringand decisionmakingSet up of aVirtual NetworkProcessCollaborationand hering andmonitoringConnectedtoControltowerSet up a Middleware software/ system integration ingprocessFigure 3: Control tower Technology ApproachERP/TMS/WMSOutboundprocess

cost of every product ordered,including a breakdown by cost,category and also showing how thesecosts have fluctuated over time. Thisdata can be used to make predictionsat the daily “operational” level and topredict supply chain costs. ControlTowers can also accurately predictETAs (Expected time of arrivals)based on what is actually happeningin areas of the supply chain that arenot always so easy to see.In order to provide this functionalityControl Towers often utilize virtualnetwork organizations. Consequently,the establishment of a Control Towerusually results in the creation of newroles at different levels in theorganization which work togethertowards capturing and monitoring theprocess flows at each stage andstandardizing operational practices.A Control Tower can be customizedaccording to the specific organization’sneeds in terms of their geographicreach, scope, functions, processes andindustry type.In order to successfully implement aControl Tower, however,organizations need to carefully thinkthrough a few vital decisions whensetting-up their Control Tower. Thesedecisions include:Function ofControl TowerPlanning andRoutingAuditing andReportingProvidesunprecedentedsupply chainflexibility fordynamic planningand routingHelps in Auditingall the stages indetail within thesupply chainmovementProvides GPStracking, FreightForwarding andinventory controlGenerate a reportthat shows the totallanded cost of everyproduct with thebreakdownFigure 4: Function of Control TowerForecastingEventManagementMake predictionsat the daily“operational” level,about ETAsProvides eventmanagement at allstages within thesupply chainForecast Supplychain cost anddemandProvidesWarehouse Mgt,Transport Mgt, YardMgt, Container Mgtand billing andinvoicingDecisionmakingProvides a one –stop-shop solutionwith centralizedaccountability andresponsibility forcost, quality andperformance bycreating decisionmaking platform

Deciding on the goals andobjectives of Supply ChainVisibility Identifying the list of functions,processes or departments to bemonitored Determining the neworganizational design Identifying which functions orprocesses can be runcollaboratively or outsourced Deciding the technology solutionto be implemented andpotentially selecting asolution provider to build theControl Tower"SFB PG #FOFöUT Deciding whether to outsourcethe Control Tower operation ormanage it in-houseWhile some of these decisions maybe complex, if done correctly, theresulting Control Tower will yieldimportant cross-functional benefitsthat ultimately also benefit endcustomers and provide theorganization with a long-termcompetitive advantage. Acomprehensive list of these benefitsis shown in the list below:-JTU PG #FOFöUTGeneralt *OUFHSBUFE 4VQQMZ IBJO XJUI BO BCJMJUZ UP SFUSJFWF JOGPSNBUJPOt 3FEVDFE DPNQMJBODF 1FOBMUJFTt *NQSPWF EFDJTJPO NBLJOH DBQBCJMJUJFTt 3FEVDFE OFUXPSL GBJMVSFT JODSFBTFE OFUXPSL WJTJCJMJUZ BOE SFTQPOTJWFOFTTt 3FTQFDU DVTUPNFS DPNNJUNFOU TDIFEVMF DPTUT RVBMJUZ BOE *NQSPWFE DVTUPNFS TBUJTGBDUJPOInboundt 0QUJNBM JOWFOUPSZ MFWFMT BOE SFEVDFE CVòFS JOWFOUPSZt 4ZOFSHJFT JO QSPDVSFNFOU USBOTQPSU DBSSJFST MFBEJOH UP SFEVDUJPO JO 5SBOTQPSUBUJPO &YQFOTFt 3FEVDUJPO JO UPUBM MBOEFE DPTUT JODSFBTF 0O 5JNF *O 'VMM EFMJWFSJFTt )FMQT UP DIBOHF TPVSDJOH TUSBUFHJFT TIJGU TVQQMJFS BMMPDBUJPOT NPEJGZ DPNNFSDJBM UFSNT SF FOHJOFFS B MPHJTUJDT QSPDFTT PS TXBQ PVU B MPHJTUJDT QBSUOFSManufacturingt "XBSFOFTT PG 8*1 JNQSPWFE QSPEVDUJWJUZt .BOVGBDUVSJOH JO PQUJNBM XBZ PWFS QMBOUT PQFSBUJOH HMPCBMMZt .PSF BDDVSBUF EFNBOE QMBOOJOH CFUUFS TDIFEVMJOH SFEVDUJPO JO DZDMF UJNFT SFEVDFE JOWFOUPSZ MFWFMT BOE UJNFMZ BOE DPNQMFUF NBOBHFNFOU JOGPSNBUJPOOutboundt *NQSPWFE MPBE FóDJFODZ JO 0VUCPVOEt *NQSPWF USBOTQPSU FóDJFODZ VTJOH CFTU JO DMBTT DBSSJFST BOE SFEFTJHOJOH USBOTQPSU TPMVUJPOTt "CJMJUZ UP QSFEJDU SJHIU &5" GPS DVTUPNFST

Setting up a ControlTowerIn order to successfully set-up aControl Tower and ultimately achievethe desired visibility, companies needto follow a proven approach. A twostage methodology to set-up an end-toend Control Tower solution that canbe tailored to an organization’s specificscope, functions, processes, industriesand geographic needs, such asCapgemini’s Control Tower approach(as shown in figure 5), has proven veryuseful in effectively setting up ControlTowers. Such an approach usuallyconsists of two distinct stages a(1) Strategic stage and an(2) Implementation stage.Strategic stageThe Strategic stage, generally entailsassessing the As-Is business, capturingthe Supply Chain Visibility needs andevaluating the benefits (includingfinancial) which a control tower couldprovide. Areas for collaboration withsubcontractors, vendors and partnerswithin the value chain are identified.Once the scope of the Control Towerset-up is finalized, it is important tounderstand existing internal systemsand the systems of identifiedcollaboration partners. After gaining athorough understanding of therequirements, a high-level To-Beconcept for the organization, processes,in/outsourcing and systems isdesigned. The plan is then shared andsigned off with the key stakeholders,along with the detailed roadmap forsetting-up the Control Tower. Thisstage usually lasts for 8 to 12 weeks.Implementation stageDuring the Implementation stage, thehigh level Control Tower architectureis designed. The most suitablemiddleware software solution to beimplemented is identified whichconsiders the current system set-upand visibility need. The selectedsolution should also help theorganization to integrate all itsprocesses and capture the informationcentrally. Following approval of theselected solution, end-to-end systemintegration proceeds on a phase byphase basis. Once the systems arecompletely integrated, testing is doneand a Business Continuity Plan tosupport any system failure isdeveloped.Once the Control Tower network isvalidated, different roles in the virtualControl Tower organization are createdand developed. Training in how togenerate and interpret different kindsof reports and track the movementswithin the supply chain is conductedand Control Tower managers arecoached in how to conduct processlevel auditing, planning andpredictions based on the availableinformation. Finally a regularmonitoring mechanism at each stagewithin the supply chain flow of theorganization is established. This stagetakes 6 to 12 months.

Stage 18 to 12 weeksStageObjectiveDeliverablesStrategyStage 2: Implementation6 to 12 weeksDesignImplementRunAssess As-Is currentsupply chain visibility,improvement areasand way forwardDesign of organization,processes, systems toimprove SC visibilityImplement organization,processes, systems toimprove SC visibilityRun and/or optimizeorganization, processes,systems to improveSC visibilityt "T *T "TTFTTNFOUt %FTJHO PG IJHI MFWFM 5P Be concepts fororganization, processes,in/outsourcing andsystemst 2VJDL XJOTt 1SPKFDU QMBOt #VTJOFTT DBTFt 0SHBOJ[BUJPO EFTJHOt 1SPDFTT %FTJHOt 4ZTUFNT BSDIJUFDUVSFt 4FMFDUJPO PG *5 TPMVUJPOt 4FMFDUJPO PG outsourcing partner(when applicable)t *NQMFNFOUBUJPO QMBOt 1SPKFDU NBOBHFNFOUt *NQMFNFOUFE organizationt *NQMFNFOUFE QSPDFTTFTt *NQMFNFOUFE TZTUFNTt #VTJOFTT QSPDFTT outsourcingt 4 WJTJCJMJUZ optimization CFODINBSLJOHt *OUFSJN NBOBHFNFOUFigure 5: Capgemini’s methodology to set-up a Control Tower

Case study: Samsung achieves improved visibility throughControl Tower implementationSamsung, with a presence in 24 locations and with more than 11,000 staff in Europe,has outsourced warehouse and distribution activities to multiple logistic serviceproviders. The fragmented landscape of these LSP’s added complexity to the supplychain optimization effort. Capgemini helped Samsung to develop end-to-end supplychain control mechanisms to improve efficiency and reduce costs by using best-in-classcarriers and reduce dependence on their LSP’s. Moreover, Capgemini developedSamsung’s capabilities to manage activities on the tactical level (e.g. carriermanagement, high level planning, contracting) by deploying a Control Tower solution.An integrated organization was implemented for planning and controlling the ITproduct flow from Port-to-Customer. A buying function for procurement andcontract management of logistics and warehousing services was developed. A newadministrative organization was designed in such a way that all required cost datais captured automatically and can be reported without manual intervention anddelays. Additionally, carrier (selection, evaluation, invoicing) and inbound(terminal planning, customs status) integration was achieved.Visibility toolControl TowerManagementOrder control/CSTeam leaderTransport planningTeam leaderControlTeam leaderDevelopmentTeam 2supportOperations inboundteam leaderCost controlInboundCarrierManagementControl Tower OrganizationThe solution deployed by Capgemini is helping Samsung to build an efficient andintegrated organization to increase load efficiency, improve tracking and customerservice and enhance transport efficiency using best-in-class carriers andredesigned transport solutions.

About Capgemini Consulting and CapgeminiCapgemini Consultingis the Global Strategy andTransformation Consulting brand ofthe Capgemini Group, specializing inadvising and supporting organizationsin transforming their business,from the development of innovativestrategy through to execution, with aconsistent focus on sustainable results.Capgemini Consulting proposes toleading companies and governments afresh approach which uses innovativemethods, technology and the talents ofover 3,600 consultants worldwide.For more information:www.capgemini.com/consultingRightshore is a trademark belonging toCapgeminiCapgemini, one of the world’s foremostproviders of consulting, technology andoutsourcing services, enables its clientsto transform and perform throughtechnologies. Capgemini provides itsclients with insights and capabilities thatboost their freedom to achieve superiorresults through a unique way ofworking, the Collaborative BusinessExperienceTM. The Group relies on itsglobal delivery model calledRightshore , which aims to get the rightbalance of the best talent from multiplelocations, working as one team to createand deliver the optimum solution forclients. Present in 40 countries,Capgemini reported 2010 globalrevenues of EUR 8.7 billion and employsover 112,000 people worldwide.More information is available atwww.capgemini.com.

Headquarters40 Holborn ViaductLondon EC1N2PBUnited KingdomTel.: 44(0) 20 7936 3800Capgemini Consulting is the strategy and transformation consulting brand of Capgemini GroupThe information contained in this document is proprietary. Copyright 2011 Capgemini. All rights reserved. Capgemini Consulting - May 2011Rob van DoesburgGlobal Lead Logistics and Fulfillment GTMTel.: 31 30 689 8514Mob.: 31 6 22 667 910Email: ing.nl

across the supply chain. As shown in figure 2, Control towers combine organizations (people), systems and processes in order to provide supply chain partners with a high level of product visibility along the entire supply chain. This enables three levels